A904 not downshifting, dark film in bottom of pan

That film is actually normal because aluminum wears off the impeller and stator which shows as a dark film like that.
FYI, the converter should have been replaced when the trans was built.
You could be right about some of it coming out of the converter though, as when the converter spins centrifugal force throws junk to the outsides and it packs around the impeller blades and sticks in there.
Still some comes loose and you will see it in a new rebuild if running the used converter from a previous trans failure.

As far as kickdown goes, has it worked ok before?
It's pretty tricky to get a kickdown at slightly higher speeds, unless the trans has a part throttle kickdown.
Early trans didn't come with the part throttle kickdown and later ones did.

View attachment 1715529485
I know I should have replaced the converter but I'm only planning to drive around this summer while I build another engine/trans combo.
Not sure if the kickdown ever worked before. This thing sat for 20 years with a burned up trans from a kickdown lever breakage. Rebuilt the clutch packs and valve body and put it back together.